The Seattle-based firm raised the money in short order, taking about three months to collect its commitments, Gottesman says.
The firm collected cash from previous investors, such as the University of Virginia Management Co., Irvine Foundation, Investment Fund for Foundations, Investure, University of Washington, BlackRock Alternative Advisors and Hillman Co. New investors include the University of North Carolina, Annie E. Casey Foundation, YMCA Retirement Fund, Oxford University and Cambridge University.
Madrona received about 10% of its latest fund from individuals, including executives at
Gottesman declined to comment about whether Steve Ballmer, Jeff Bezos or Bill Gates were among the Microsoft or Amazon executives involved in the fund.
Despite the fast fund raise, Madrona probably won’t tap into its new fund until the end of this year, Gottesman says. The firm has been investing its previous fund since 2005, but did not officially close the $167 million vehicle until April 2006.
Madrona will likely hire one or two managing directors to help deploy its latest fund, Gottesman says. “That’s part of our strategy—to build our capability and get better,” he says. The firm currently has three managing directors besides Gottesman: Tom Alberg, Paul Goodrich and Matt McIlwain.
Gottesman says that with three major acquisitions from its portfolio during the past eight months that the average return on the three deals was 5x the amount Madrona invested.
Madrona sold optical networking company World Wide Packets to CIENA Corp. in January for $290 million. Madrona led the company’s recapitalization in 2003, a move that wiped out about half of the company’s $130 million in venture financing, Gottesman estimates.
The firm also sold flight ticket price predictor Farecast—which had raised more than $20 million from Madrona and other investors—to Microsoft for $75 million in April. It also sold online stock trading company ShareBuilder, which had raised $75 million from VCs, to ING for $220 million in November 2007.
The firm was named in a class action lawsuit earlier this year associated with the precipitous slide in share price of digital storage company
Gottesman declined to comment about the ongoing litigation, but said that Madrona still managed to do well on IPO since it invested at such an early stage in the company’s development. The company raised about $70 million in venture funding prior to the IPO. Gottesman says that the firm has distributed some of its holdings of Isilon to limited partners. —Alexander Haislip